Oracle (ORCL) Stock Rating Upgraded at Goldman Sachs
NEW YORK (TheStreet) -- Oracle (ORCL) - Get Report stock was upgraded to "conviction buy" from "buy" at Goldman Sachs on Monday.
Goldman Sachs is expecting the Redwood City, CA-based enterprise software company to see revenue growth accelerate from its cloud platform in the second half of 2016.
Oracle's fiscal 2016 second quarter results should show that promotional pricing is decreasing, the firm added.
"While recent execution inconsistency might be causing investors to pause, we believe execution on Oracle's targets will start to help expand the multiple," Goldman said in a note. "In fact, if Oracle is successful in attaining fiscal year 2016 bookings targets, we would expect management to guide to accelerating cloud revenue growth in fiscal year 2017 and with gross margins expanding, we believe fiscal year 2016 will mark the bottom in non-GAAP operating margins."
The firm raised its price target on Oracle stock to $47 from $45.
Shares of Oracle were up by 1.42% to $37.84 in pre-market trading on Monday.
Separately, TheStreet Ratings team rates ORACLE CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
We rate ORACLE CORP (ORCL) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and feeble growth in the company's earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ORCL's debt-to-equity ratio of 0.89 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.86 is very high and demonstrates very strong liquidity.
- The gross profit margin for ORACLE CORP is currently very high, coming in at 80.69%. Regardless of ORCL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 20.67% trails the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Software industry average. The net income has decreased by 20.0% when compared to the same quarter one year ago, dropping from $2,184.00 million to $1,747.00 million.
- Net operating cash flow has decreased to $5,856.00 million or 12.96% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, ORACLE CORP has marginally lower results.
- You can view the full analysis from the report here: ORCL
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.